Planning to trade in the prosperous economy of the UAE? Here are some of the conditions which you must be well-aware of so that you can deal with the market dynamics of the UAE. Previously, the GCC countries hardly charged any taxes on the consumption of goods and services. But the year 2018 witnessed the UAE government imposing a 5% VAT on various products. The government passed the bill for the introduction of the VAT system in the UAE country so that the economy could prosper and develop in a more advanced way by raising capital from the public itself.

As a result, the retailers or the tradesmen have to pay taxes and to pay the taxes to the government, the prices of commodities soared up by 5%. Thus, the end consumers or the public buying goods and services are indirectly paying taxes to the government by the purchases of goods and services at a slightly higher price than before. It has not caused much tension or restlessness among the people of the UAE; however, some retail segments have suffered a blow due to the elasticity of the demands.

The Federal Tax Authority passed regulations under which taxes are to be paid and invoices are to be generated. Overall there are two categories in which the tax invoices should be generated. One is the detailed tax invoice where the recipient has to input details in quite a few columns and the other is the simplified tax invoice which is a simpler version of the detailed tax invoice.

The detail tax invoice is generated for tradespersons who are wholesalers or suppliers of goods with a bigger margin, whereas the simplified tax invoice is for traders dealing in small business or supplies of commodities. However, whatever is the margin of the trade but any business earning an income of AED 375,000 annually is liable to pay VAT to the UAE government.

For recipients who have not yet registered themselves with the FTA under the regulations of VAT have to fill in the simplified tax invoice for the payment of taxes. Also, recipients who are registered under the VAT authorities but their trade or supplies do not exceed the count of AED 10,000 then they are also liable to fill in the simplified tax invoice to the Federal Tax Authority of the UAE. Listed below are the necessary columns of the simplified tax invoice which are to be glanced upon and filled by the small-scale business and trades companies.

Raise a Simplified Tax Invoice in UAE

  1. Name of the supplier
  2. Address of the supplier
  3. Tax Registration Number of (VAT Number)
  4. Date of issue of the tax invoice
  5. Description of products supplied
  6. Total Amount Payable
  7. Total VAT Chargeable

Remember the most important difference between a detailed tax invoice and a simplified tax invoice is that the detailed tax invoice is for those dealing in the wholesale market and supplying goods to the retailers. Whereas, the simplified tax invoice, as the name suggests, is a simplified invoice for retailers or suppliers reaching out to the consumers. Thus, both tax invoices are issued by the government to serve the same goal, that is, to provide the government with value-added taxes.

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